E-marketplace ? Facts and Fictions
Not long ago, industry pundits were touting B2B marketplaces or exchanges as Internet era panacea for productivity and cost-cutting problems of corporate world. Buoyed by excessive investor interest and driven by a desire to cash in on the enormous dot-com valuations of late 90s, marketplaces were sprouting like autumn mushrooms. With the collapse of stock market, it did not take much time for burgeoning B2B marketplaces to come to a screeching halt!
When in 2001 high profile marketplaces like Chemdex, a life science marketplace started to tumble down, and most of the marketplaces started to show sign of disappointing growth rate, it became clear that something is wrong with the prevailing business model of b2b e-marketplaces.
Optimists claim nothing is wrong with B2B e-marketplaces, as a new technology, it is merely going through the normal evolutionary stages. Others feel that business processes are way too complex an issue, substantially based on human behavior and intricate relationships; and this complexity will prevent wide spread implementation of online supply chain mechanisms through B2B exchanges.
But, the truth is probably somewhere in between! There is no doubt that any business, irrelevant to its size, is able to create some sorts of value if they use B2B marketplace effectively. As far as B2B E-commerce is concerned, most agree, that eventually businesses have to do significant part of their transactions online. The only thing is - it might take a bit more time for widespread adoption, than initially expected.
Slow implementation of B2B e-marketplaces is a natural consequence of some inadvertent stumbling blocks.
All these conditions are maybe right and, probably mass scale adoption of e-marketplaces won't take place another several years. However, don't think that companies should relax. As some industries are more advanced in their adoption of B2B technology, companies should constantly check where they stand. If their competitors are already practicing e-business actively; or many of their suppliers are by now on some sorts of exchanges, this is the right time for these companies to consider their online business approach seriously.
The sooner companies understand the benefits that they can reap from B2B exchanges the better it would be for them. For suppliers e-marketplaces offer benefits like liquidity improvement, cost savings, better inventory management, demand forecasting, dynamic pricing etc. Buyers benefits include: cost reduction, real-time purchase, best available price and many others. Research indicates that companies, thanks to B2B exchanges, can gain remarkable cost reductions: 20 to 40 percent of overhead expenses, 5 to 15 percent of buying cost, Purchase Order processing cost from US$ 75 to just US$ 6-8; and decrease of document errors from 20 percent to less than one percent.
Apart from these benefits, early adoption of B2B marketplaces also has great implications for companies. Early birds get considerable information advantage over their competitors; have enough time to learn from trial and error and participate in setting the rules for the exchanges as opposed to - forced to abide by the rules as it would be the case for late-comers.
Whatever approach the companies decide to take in their quest of B2B technology, one thing is for sure that the e-marketplaces are here to stay. Over time, they will definitely evolve and their business models will also change, however, there is no doubt that a major portion of e-business will transact through e-marketplaces in near future.
About The Author
Nowshade Kabir is the founder, primary developer and present CEO, of Rusbiz.com, a global business to business e-commerce portal with feature like storefronts, aggregated catalog, e-marketplace, trade leads, internal messaging system supply chain solutions, etc. With a doctorate in Information Technology, Dr. Kabir has worked an advisor to government projects and has over 12 years experience in International Trade. An author of many B2B and business related articles; he publishes a bi-weekly E-zine for online business community. You can subscribe to his newsletter free of charge from http://www.rusbiz.com.
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